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`Pages 1-12
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN FRANCISCO DIVISION
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`FINJAN, INC., a Delaware
`Corporation,
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`Plaintiff,
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`v.
`
`JUNIPER NETWORKS, INC., a
`Delaware Corporation,
`
`)
`
`))
`
`)
`Defendant.
`_____________________________)
`
`TRANSCRIPT OF TELEPHONIC DISCOVERY HEARING
`BEFORE THE HONORABLE THOMAS S. HIXSON
`UNITED STATES MAGISTRATE JUDGE
`
`APPEARANCES:
`
`For Plaintiff:
`
`For Defendant:
`
`Transcription Service:
`
`YURIDIA CAIRE, ESQ.
`DANIEL D. WILLIAMS, ESQ.
`Kramer Levin Naftalis & Frankel, LLP
`990 Marsh Road
`Menlo Park, California 94025
`(650) 752-1700
`
`JOSHUA P. GLUCOFT, ESQ.
`Irell & Manella, LLP
`1800 Avenue of the Stars, Suite 900
`Los Angeles, California 90067-4276
`(310) 277-1010
`
`Peggy Schuerger
`Ad Hoc Reporting
`2220 Otay Lakes Road, Suite 502-85
`Chula Vista, California 91915
`(619) 236-9325
`
`Proceedings recorded by electronic sound recording; transcript
`produced by transcription service.
`
`) Case No. 17-cv-05659-WHA
`
`San Francisco, California
`Courtroom A, 15th Floor
`Thursday, June 27, 2019
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 2 of 12
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`2
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`SAN FRANCISCO, CALIFORNIA
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`THURSDAY, JUNE 27, 2019 11:11 A.M.
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`(Call to order of the Court.)
`
`--oOo--
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`THE CLERK: We are here in Civil Action 17-5659, Finjan,
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`Inc. v. Juniper Networks, the Honorable Thomas S. Hixson,
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`presiding.
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`And, counsel, let’s hear your appearances and we’ll start
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`with the Plaintiff.
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`MS. CAIRE: This is Yuridia Caire from Kramer Levin on
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`behalf of Finjan.
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`MR. WILLIAMS:
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`Daniel Williams from Kramer Levin on
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`behalf of Plaintiff Finjan.
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`THE CLERK: And how about Defendants?
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`MR. GLUCOFT: Your Honor, it’s Josh Glucoft from Irell
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`& Manella on behalf of Defendant Juniper Networks.
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`THE COURT: Good morning, everyone. So we are here on
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`the joint discovery letter brief concerning Finjan’s relationship
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`with and lawsuit against Trustwave. So let me put this question
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`to Finjan.
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`Why aren’t RFPs 3 to 5 and No. 13 relevant to
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`determining the degree of comparability between the Trustwave
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`license and the hypothetical negotiation in this case, as well as
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`to calculating the reasonable royalty?
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`MS. CAIRE: Good morning, Your Honor. This is Yuridia
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`Caire. Well, this is -- the Finjan v. Trustwave case is a breach
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`of contract litigation.
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`We’ve given Juniper the actual license
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 3 of 12
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`3
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`agreement with Trustwave, and there’s really been no other
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`evidence that a breach of contract or that additional royalties
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`would need to be paid under that agreement would be relevant to
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`any damages analysis in this case.
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`THE COURT: What about the negotiations surrounding the
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`license agreement with Trustwave?
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`Could that shed light on the
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`hypothetical negotiation here or a reasonable royalty here?
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`MS. CAIRE:
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`No, Your Honor, because they already have
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`the actual agreement and Finjan has already produced mediations
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`leading up to the signed agreement with Trustwave.
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`THE COURT: Okay.
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`You mean --
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`MS. CAIRE:
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`So what they’re seeking is actually
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`information related to the breach of contract issue.
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`THE COURT:
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`Well, some of that is.
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`But like RFP 3 is
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`seeking "communications and documents regarding any agreements
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`between Finjan and Trustwave involving the patents-in-suit."
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`That’s not necessarily even about the lawsuit, is it?
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`MS. CAIRE: Well, I guess it depends at what time frame,
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`Your Honor. So leading up to it, we agreed to produce everything
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`up to the original agreement. And from what I understand, they’re
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`seeking information regarding negotiations that may be related to
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`the subsequent acquisition that occurred in the breach of contract
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`issue.
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`THE COURT:
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`But why should I limit them to things
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`leading up to the 2009 agreement?
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`Why not the 2012 amended
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 4 of 12
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`4
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`agreement?
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`MS. CAIRE: Again, Your Honor, I think we actually have
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`produced communications up through 2012, and I think we would be
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`willing to give communications up to that date.
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`But our
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`understanding was they were seeking information past that.
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`THE COURT:
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`I think they are.
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`That’s right.
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`But why
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`isn’t that relevant as well?
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`MS. CAIRE: Because that’s all related to the breach of
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`contract issue. And so they’ve already got the actual agreement.
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`And so I don’t understand what a breach of contract or any
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`communications relating to a breach of contract would have to do
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`with product management (ph).
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`THE COURT: Well, one of the issues -- and this gets to
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`the breach of contract issue -- is that one of Trustwave’s
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`defenses is to say that they actually don’t use or Finjan hasn’t
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`sufficiently allege that they use Finjan’s patents in the products
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`they sell. Isn’t that relevant to the issue of irreparable harm,
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`including whether Trustwave is a competitor and then secondary
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`considerations of known obviousness?
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`MS. CAIRE:
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`No, Your Honor, because the agreement was
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`signed in -- the original agreement was signed in 2009, amended in
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`2012.
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`And so as far as if seven years later the new acquired --
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`you know, the acquiring company is still using the product, is not
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`relevant.
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`There’s been no evidence that any sales or additional
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`sales would change that.
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 5 of 12
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`5
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`THE COURT:
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`Okay. Juniper, can you respond?
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`MR.
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`GLUCOFT:
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`Yes,
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`Your
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`Honor.
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`So
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`I
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`think
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`fundamentally, Your Honor has really hit the nail on the head.
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`There are several reasons why the documents we’re seeking, created
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`not just up until 2009 but through the 2012 amendment, and then
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`certainly beyond that, especially up until the 2016 acquisition
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`attempting alleged converting a fully paid-up license into an
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`ongoing royalty license.
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`So from -- just from the damages perspective, obviously if
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`you have a fully paid-up license, you need to know if you can
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`convert that to a royalty rate or an expected royalty rate for a
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`damages analysis -- which is something that we would be doing as
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`part of our damages analysis -- you have to know how many products
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`are sold that allegedly would have been royalty-bearing had it
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`been a per-unit royalty rather than a fully paid-up lump sum as
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`the original 2009 agreement was.
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`And so the fact that there’s a dispute between the parties
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`as to how many products (indiscernible) and what -- how they may
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`or may not (indiscernible) because, remember, Finjan has a
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`portfolio of patents, many of which are not asserted against
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`Juniper -- all of those things are highly relevant to how we turn
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`that into expected royalty rates and we can say this is or is not
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`comparable for the reasons that you have to adjust higher or
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`lower.
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`In addition to that, there’s also, for example, a provision
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 6 of 12
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`6
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`in the agreement that requires the parties to annually negotiate
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`what the appropriate license would be and the -- excuse me -- what
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`the appropriate royalty rate would be in the event of an
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`acquisition.
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`And so even post the Singtel acquisition, there is
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`-- we’re expecting to see documents that say, Hey, I don’t think
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`your technology is worth that much and this is my rate. And then
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`Finjan coming back and -- I mean, each year the 2012 amendment at
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`least compensates the parties negotiating what the appropriate
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`royalty rate is.
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`And so looking at this 2009, it misses so much of the
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`picture.
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`Taking a step back, though, we’re not just saying that this
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`is relevant -- that these documents are relevant to damages. They
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`are necessary for marking and they’re also highly relevant to
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`their consideration.
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`There’s one thing I want to point out, by the way, about
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`marking -- which Finjan has suggested was moot in their opposition
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`-- we actually provided Finjan with a stipulation, a draft
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`stipulation saying, Okay, if you guys are not going to allege
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`constructive notice, then let’s formalize this so that the parties
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`are clear as to what is and is not part of this case.
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`And at least to my knowledge, they never even got back to us
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`with a response. I has a post-draft (ph). So for all intents and
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`purposes, constructive notice is still in the case and, as I’m
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`sure
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`Your
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`Honor
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`is aware, the law requires that all or
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 7 of 12
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`7
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`substantially all of a licensor/licensee’s product bear the
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`marking of the patent number that they practice. And so what we
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`need to do is we need to get to the bottom of which Trustwave
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`product practiced which patents, are those -- are those the
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`patents that are asserted against Juniper and, if so, were they
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`marked.
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`And so all of the disputes -- all of the discussions
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`between the parties, taken the audit report identifying which
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`products practiced, that’s all relevant to the marking defense
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`which isn’t moot because Finjan refuses to stipulate to it.
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`THE COURT:
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`On that issue, I understand that they may
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`have refused to sign the stipulation, but they did send you that
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`email and now there’s the emails in the record and they’re using
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`it to affirmatively state in the letter brief that they’re not
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`asserting constructive notice at the upcoming trial. Aren’t you
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`pretty solid on that? Like if they tried to assert constructive
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`notice in front of Judge Alsup, don’t you have a pretty good
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`record at this point that they can’t do that?
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`MR. GLUCOFT:
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`So certainly we wouldn’t forget about
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`these. I think there is and there has been a dispute between the
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`parties as to what exactly constructive notice requires -- what
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`exactly that means under Section 287. And so certainly, you know,
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`if it were so straightforward that no constructive notice at the
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`upcoming trial and that were totally sufficient, that’s what we
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`would have put in the proposed stipulation. But there’s a lot of
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`case law that comes with Section 287. We want to make sure that
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 8 of 12
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`8
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`it’s clear what is and isn’t being asserted.
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`And if you’ll
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`notice, for example, they also always qualify things like "at the
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`upcoming trial." And because (indiscernible) second trial in this
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`case, there may very well be future trials, we’re unclear as to
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`even
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`what
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`that
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`qualification means both in a context of
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`(indiscernible) and in the email.
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`And so, again, we’re just -- we’re not sure where the
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`potential disagreement may be.
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`But for whatever reason, the
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`parties still haven’t seemed to finalize anything and we can’t
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`rely on this email when the parties have a disagreement in the
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`past about what constructive notice actually means as is required
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`under Section 287.
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`THE COURT: Okay. Thank you. Finjan, can you respond?
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`MR. WILLIAMS:
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`Your Honor, this is Daniel Williams on
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`behalf of Finjan. I heard Defendant’s counsel say that Finjan did
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`not respond to their draft proposal, and I would just like to
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`correct for the record that Finjan did actually provide edits to
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`their draft proposed stipulation.
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`So we -- so the parties are
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`still negotiating that stipulation for the marking.
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`THE COURT: I see. Okay. Thank you.
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`MS. CAIRE:
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`Your Honor, I could, if you’d like, any
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`further questions I can also address.
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`THE COURT: I did have a question. You made an argument
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`that even if I think all this stuff is relevant, I could still
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`deny the motion to compel because Juniper has pending ESI requests
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 9 of 12
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`9
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`that may result in the production of these documents.
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`I didn’t understand that argument. If I grant the motion to
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`compel, I’m just telling you to produce something.
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`I’m not
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`telling you how to do it. If you accomplish it through ESI, you
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`know, good for you.
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`So what -- can you explain what you meant
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`with that ESI argument?
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`MS. CAIRE:
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`Sure, Your Honor.
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`So, actually, the RFPs
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`that
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`they’re
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`relying
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`on,
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`three
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`of
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`them
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`are
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`related
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`to
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`communications, and so those would be all covered under the ESI.
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`The other two are documents related to negotiations and what they
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`include in the royalty payments or payment amount and obligations
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`to pay royalties. And so we’re saying that it’s premature because
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`we’re still negotiating and finalizing the ESI terms, which one of
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`their terms was Trustwave.
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`And so as far as whether they would
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`want -- you know, it seems to us that it’s a fishing expedition to
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`(indiscernible) on things that they already have information on
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`and will get additional information if, you know, Your Honor finds
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`that any information post-2012 should also be produced and it will
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`be, you know, produced as ESI rather than having to go and search
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`for documents to the extent that they’re asking for it in these
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`RFPs.
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`THE COURT:
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`Okay.
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`Juniper, do you want to respond on
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`the ESI issue?
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`MR. GLUCOFT: Yes, Your Honor. So to be clear, the ESI
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`order sets out -- provides us a process by which each side can
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 10 of 12
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`10
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`select a certain number of custodians, a certain number of search
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`terms per custodian.
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`And it is true that for one of the
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`custodians that we had selected, one of the search terms was
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`"Trustwave." And so just taking this out there, the first kind of
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`issue with them hunting through our (indiscernible) class is that
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`if that particular custodian wasn’t copied on communications or
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`isn’t the custodian of the documents that we’re looking for, then
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`we’re never going to get the complete picture because we’re only,
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`at most, going to receive what this particular custodian, Julie
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`Montinola, was copied on. So that’s the first issue.
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`The second issue is actually it still doesn’t resolve the
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`situation because under the ESI order, the parties reserved the
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`right to still withhold documents that hit on the search terms if
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`it was valid -- if it was subject to another valid objection; for
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`example, privilege, and explicitly including relevance.
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`And so the concern is that Finjan could again say, Okay,
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`well, this document, it does hit on the Trustwave search term for
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`this one custodian that you’ve identified.
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`But because it only
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`relates to Trustwave and we believe it’s not relevant for the
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`reasons listed in our objections to your RFQ and, therefore, we’re
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`not producing it.
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`And so the result is that all we’ve done is kick the can down
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`the road, still requiring the Court to rule on the relevance of
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`these documents. So we agree with Your Honor that ultimately the
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`way that they go about searching and identifying these documents
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`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 11 of 12
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`11
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`-- obviously, you know, we’re not micromanaging that piece of it.
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`But to pump to what’s coming on with the ESI order, not only
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`is it most certainly going to miss anything that Ms. Montinola was
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`not copied on, but it’s also potentially just kicking the can down
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`the road on the relevance of these documents.
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`The last final point I’d just like to make, Your Honor, is
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`that, you know, relevance aside, Finjan -- they’re not alleging
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`any concrete burden. They’re not saying that they can’t just run
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`-- you know, they don’t have this all in one handy folder on their
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`network drive or that they can’t just search their system and pull
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`up the term "Trustwave."
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`They’re just saying not relevant, not
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`relevant, not relevant.
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`But, I mean, even a marginal amount of
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`relevance -- and, again, we think it’s substantially relevant for
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`all the reasons we discussed in the brief -- even a little bit of
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`relevance is worth what is seemingly no real burden.
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`They just
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`haven’t computized it at all.
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`THE COURT:
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`Okay.
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`Thank you.
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`Counsel, thank you.
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`I
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`think I have what I need to issue an order, so I will take this
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`under submission.
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`ALL:
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`Thank you, Your Honor.
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`THE COURT: Thank you, Counsel.
`
`//
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`//
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`//
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`//
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`I, Peggy Schuerger, certify that
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`the foregoing is a
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`correct transcript
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`from the official electronic sound recording
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`provided to me of the proceedings in the above-entitled matter.
`
`Signaturé
`
`o
`
`:
`pproved Transcriber
`
`September 26, 2019
`Date
`
`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 12 of 12
`Case 3:17-cv-05659-WHA Document 620 Filed 09/30/19 Page 12 of 12
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`(Proceedings adjourned at 11:25 a.m.)
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`Peqqy Schuerger
`Typed or Printed Name
`Ad Hoc Reporting
`Approved Transcription Provider
`for the U.S. District Court,
`
`Northern District of California
`
`